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Config of Group assets - Tax Depreciation Calculation : India

Former Member
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Dear Seniors,

can you please explain the configuration of the Group assets and how exactly the tax depreciation calculation in India happens for the individual assets with scheme of entries.

Thanks and Regards

Sathish

Accepted Solutions (0)

Answers (6)

Answers (6)

Former Member
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thnks

krishnakishore_gaddam
Contributor
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Hi,

In India, depreciation on assets for the purpose of computation of net income as per the Income Tax (IT) Act 1961 is calculated over a block of assets instead of individual assets as allowed under the Companies Act 1956. Asset acquisitions and retirements are managed over the block level. The IT Act prescribes certain rates of depreciation to be used under the Written down Value (WDV) method over these asset blocks to compute depreciation.

The following are the customization settings that may be followed in the R/3 system in order to manage your assets in the income tax depreciation area.

1. Copy the standard chart of depreciation 0IN as provided by SAP and create your own chart of depreciation.

2. Use the depreciation area 15 for the purpose of management of assets under the IT Act. Make it statistical in nature. (Reference Transaction Code: OADB). Do not check the box negative net book value.

3. Specify that the Income Tax depreciation area takes over the APC from the book but not make it identical (Reference Transaction Code: OABC).

4. Create an asset class for the purpose of income tax blocks. This asset class will be used to create only group assets. (Reference Transaction Code: OAOA)

5. Specify that the depreciation area for income tax can be managed only for group assets. (Reference Transaction Code: OAYM). This would mean that depreciation for this depreciation area would be computed only at group asset level.

6. Specify that the asset class defined in (b) above will be used for creating group assets only. (Reference Transaction Code: OAAX)

7. Two period control methods (IT and NL) have been defined in the system for determination of start or the end of depreciation calculation at the time of a fixed asset acquisition or retirement. You may use these period control methods while creating the depreciation keys for the purpose of IT depreciation.

Calendar assignments have been made for the above mentioned period control methods in order to reflect valuation requirements as per the Income Tax Act (Transaction Code: OAVH). You may create your own period control methods depending on the fiscal year variant you use. The period control methods supplied are based on the fiscal year variant V3.

8. Depreciation Keys: The following depreciation keys have been created in the system. They correspond to the income tax blocks that are prescribed under Indian tax laws. They are as below:

Depreciation Keys:

1. IN1 - Tax Depreciation - 5% -

I Hope it will give you some basic guidance.

Regards,

-


Krishna Kishore

saikrishna_vallurupalli
Active Contributor
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presently SAP is not supporting the IT depreciation and SAP is developing the new process for the same, it is pilot stage. by 2010 q1 sap is planing to release the new process for IT depreciation.

if you want pilot notes please raise the OSS message

Former Member
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hi,

The Group asset functionality will not serve fully for the purpose of IT depreciation compliance in India, as there is block of assets cocepts, but there is no other solution available except this solution.

As far as the process is concerned,

1. A Group asset is to be created.

2. The Group asset needs to be assinged to the IT depreciation area for every asset created for which the IT depreciation area is made applicable.

3. The Deprecaiton % will be specified in the Dep key

4. The Depreciation will not be posted, it will only calculate and show it in the books of accounts as it is required only for reporting purposes.

This is only a outlook there is more into this configuration to be made successful.You may face many hardships in relation to this . This is only a opinion and suggestion.

Regards,

Bharathi.

Former Member
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Hi

Although Group Assets are being used for Income tax Depreciation, it is not really helpful. That's why SAP is coming to altogether new concept of Block of Asset in EHP5 on Ecc 6.0

Till that, we may have to rely on existing Group Asset functionality.

Thanks

CC

Former Member
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Hi,

Create asset class for Group asstes. then create the asset master under the same as per the block of asset in Income tax.

Also in Specify Depreciation Areas for Group Assets. and Specify Asset Classes for Group Assets.

Former Member
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Hi,

Ramya.

Can you please explain how to do this exactly at configuration level ?

It would be very helpfull , If you kindly explain it.

Regards,

Pankaj.